Explain the derivation of consumer surplus .

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Q1 Explain what economic catch 22 is. Q2 What are the consequences of declining houses pricing? Q3 What is the argument about necessary evil? Q4 Explain the idea of irrational exhuberance? Q5 Explain what was the economic paradox?

< Files 9:10 Fri Mar 21 Chapter+11-Public+Goods+and+Common+Res... The Economic Catch-22 By Robert J. Samuelson We are now in the "blame phase" of the economic cycle. As the housing slump deepens and financial markets swing erratically, we've embarked on the usual search for culprits. Who got us into this mess? Our investigations will doubtlessly reveal, as they already have, much wishful thinking and miscalculation. They will also find incompetence, predatory behavior and probably some criminality. But let me suggest that, though inevitable and necessary, this exercise is also simplistic and deceptive. -- business It assumes that, absent mistakes and misdeeds, we might remain in a permanent paradise of powerful income and wealth growth. The reality, I think, is that the economy follows its own Catch-22: By taking prosperity for granted, people perversely subvert prosperity. The more we managers, investors, consumers - think that economic growth is guaranteed and that risk and…

2.) Using the line drawing tool, plot and label the isocost line. Carefully follow the instructions above, and only draw the required objects. FILL IN BLANK d. Now suppose the price of labour rises to $5 per unit, but the firm still wants to produce 500 tires per day. Explain how a cost-minimizing firm adjusts to this change (with no change in technology). A cost-minimizing firm will be producing on ▼ The samedifferently slopedparallel isocost line. The firm will use ▼ moresameless labour and ▼ less the same amount of more capital and produce on ▼ a higher point on the same a lower point on the same a lower a higher isoquant curve.

Answer 2

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Answer 6

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Answer 7

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Answer 8

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

PRIN OF MICROECONOMICS, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.